71 equity schemes offered negative returns by 2022. Most of these schemes are sector or thematic funds. Of the 71 schemes, 17 have fallen more than 10% YTD and four have fallen more than 20% since January 2022. The scheme that fell the most this year was the Nippon India Taiwan Equity Fund. The plan is down 31.28% (year-to-date or YTD). See plans that fall by more than 20% by 2022.
Source: ACE MF
As can be seen from the data, the four biggest laggards came from the technology and global financial categories. ICICI Prudential NASDAQ 100 Index Fund, which invests in stocks listed on the US stock exchange – NASDAQ. The US market has fallen more than 25% from its peak in 2022. This has affected all plans to invest in stocks listed on US indices.
Tata Digital India Fund was among the recommended schemes in the technology sector. However, high inflation and turbulence in the IT sector in the USA and India have hit the plan hard. The fund manager believes that the volatile level is likely to continue for some time. ICICI Prudential Technology Fund is among the laggards due to uncertainties in the technology sector.
Mutual fund advisors always warn against such situations with thematic and sector funds. Since the portfolios of these plans are focused on one sector or theme, any geo-political or economic issues can hit the portfolios hard. Unlike pure equity schemes where the fund manager can pick stocks from all sectors and avoid losses.
If you’re investing in sector or thematic funds, make sure you’re okay with the extra risk. Mutual fund advisors do not recommend these schemes to new or inexperienced investors. They say these schemes are suitable for experienced or sophisticated investors who can tolerate volatility and have a problem with additional risk. They also require investors to limit their investments to 10-20% of their total portfolio.